ACA, Angel Groups, and Angel-Backed Companies
Angel Capital AssociationSeptember, 2012
Angel Capital Association Today• Mission: Fuel the success of angel groups and private
investors who actively invest in early-stage companies• 170 member angel groups• 8,000+ accredited investors• 20 affiliated organizations• 48 states/ provinces• Charitable partner:
ACA Members Include Most Top Angel Groups
Profile of Angels in Groups - Median• Years investing 9• Number of investments 10• Total exits/ closures 2• Years as entrepreneur 14.5• Number ventures founded 2.7• Age 57• Percent of wealth in angel investing 10%• Education Masters degree
Source: Returns of Angels In Groups, Robert Wiltbank, Willamette University, published by Kauffman Foundation - 2007
ACA Members and Innovative Startups• Fund about 800 new companies every year (mostly USA, Canada)• More than 5,000 companies in portfolio• Typically on Board of Directors (or observers)• See 75,000+ companies every year – lead deal flow in their
communities• Exits by acquisition and IPO – more members are partnering with
strategic corporations for early exits
Cool Portfolio CompaniesExamples of Exits in 2010 and 2011
Carbonite (IPO)Coffee Equipment Co (Starbucks)Green Dot (IPO)Healthcare Waste Solutions(Stericycle)Insitu (Boeing)Language Weaver (SDL)MedSage (Philips/ Respironics)Merscom (Playdom)NutshellMail (Constant Contact)Protez Pharmaceuticals (Novartis)
Pump Engineering (Energy Recovery, Inc)
Raysat Antenna Systems (Gilat Satellite Networks)
Sabal Medical (Swisslog)Shelfari (Amazon)SmartCells – (Merck)Trius Therapeutics (IPO)Zave Networks (Google)Zipcar (IPO)
VoicePublic Policy• Lobbying
Promotion• External Marketing
Member Communications• Confidence Survey• Investor Referrals• LinkedIn• Industry Awards
Portfolio SuccessPortfolio Creation• Background Checks• Syndication Meetings• Sector Group Support
• Life Science• Clean Tech•
Portfolio Support• Insurance (starts w/ D&O)• HP Store for ACA• Dell Innovators Credit
FundPortfolio Management• VC Experts• Angel Tools
Professional DevelopmentEvents• Summit• Regional Meetings• Leaders WorkshopResources• Webinars• Data• Angel Group Documents
(Member Only Site)• SyndicationServices• eHealth, Gust
Member Benefits
Key Values for Members in 2012• Federal Tax Policies:
– Advocating for angels to SEC in JOBS Act rulemaking– Working with Senate and House on 25% tax credit– Working with Congress & White House on restoring 100% exemption on QSBS/
1202 (and fixes to increase use)• Innovation Coalition Capitol Hill Day – Members meet Congress.• Services and Discounts:
– Angel Assure – Insurance products for angels, angel groups, and portfolio companies
– Venture Experts – annual subscription for $1,000 per group• Halo Report – Building robust dataset and analysis of our field• Communication – ACA Flash, LinkedIn, Twitter, Webinars, Site Documents
Tools that Benefit Angels & Portfolio Companies
ACA’s Policy Platform – 2011-2012• Consistent and Friendly Regulations
– Continue working with SEC on accredited investor rules &– JOBS Act – General Solicitation, Crowdfunding, IPO on-ramp
• Federal Tax Policies– 100% capital gains exemption on QSBS (Sec 1202) – 25% Angel Tax Credit
• Renew and Fix Qualified Small Business Stock– Regain 100% exemption on gains to investors– Reduce holding period, Increase exit rollover period
• Focus: the intersection of entrepreneurs and angels – Angels provide more than money to entrepreneurs – they know how to turn ideas
into valuable companies and innovations• Premier source of knowledge and skills for investors and entrepreneurs to
grow• Three main focus areas:
– Education– Research and Data– Mentoring
• World-wide footprint• Founded by Ewing Marion Kauffman Foundation
ARI Education Programs• Full Day Seminars
– Angel Investing Overview– Starting an Angel Organization
• Half Day Workshops– Term Sheets– Due Diligence– Trends in Raising Capital– Valuation of Early-Stage Companies– Pitching Investors
– Present in person – 60 events in FY 2012 and growing– State Department Grant – international presence
The Angel Group Landscape
Statistics, Trends, and Impact of Angel Investors(Probably More than You Want to Know)
Companies Backed by American Angels
Source: Business Dynamics Statistics Briefing: Jobs Created from Business Startups in the United States. Kauffman Foundation, January 2009.
HAIL TO THE JOB CREATORS
20,02924,035
11,445
309
889
1,604
0
5,000
10,000
15,000
20,000
25,000
30,000
Startup/Seed Early Stage Expansion/Later
Venture CapitalAngel Investment
Angels Invest in the Majority of Startup & Early Stage DealsNumber of Deals in 2009: Angel Investment and Venture Capital
Source: Jeffrey E. Sohl, Center for Venture Research and 2010 NVCA Yearbook
Angels: Majority of US Startup Funding
Sources: Center for Venture Research and PwC MoneyTree
6,231
9,976
3,491
1,700
5,321
8,583
6,371
0
4,000
8,000
12,000
16,000
Seed Early Expansion Later
US
$ M
illio
ns
Investment Stage
Funding by Source and Stage- 2010
Venture CapitalAngels
• US $20.10 billion• ~61,900 deals• 31% seed/startup• 67% early/expansion stage• 265,400 individuals
Angel Investors 2010• US $21.97 billion• ~2,750 deals• 8% seed/startup/ 24% early stage• 68% later/expansion capital• 462 firms active
Venture Capital 2010
Angel Groups are Small - but Important - Subset of All American Angels
8,600,000
InformalInvestors
3 study estimates
Investors in Angel Groups
Active Angels
Center for Venture
Research
U.S. Millionaires
1,000,000
265,000
15,000
Sources: Spectrem, academic studies, 2012
Growth in Number of American Angel Groups
Sources: Center for Venture Research (pre 03 data) and Kauffman Foundation/ARI (04-11 data)
050
100150200250300350400
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Why Angels Join Groups• Dividing the work eases the pain• Variety of vertical experience available• Standardized processes and term sheets• Pick and choose the deals you like• Deal flow encouraged, entrepreneur-friendly• Ability to find right skills to support portfolio companies• Great camaraderie among the like-minded
Average Total Investments Per Group – 2011
Percent of GroupsSource: ACA-SVB Confidence Survey – March, 20110 5 10 15 20 25
$2,000,000 Plus
$1,000,001 to $2,000,000
$500,001 to $1,000,000
$251,000 to $500,000
$100,001 to $250,000
$25,000 to $100,000
$0
67% of Angel Groups Invest $150K to $500K per Deal• Investment surprisingly
broad• Average deal size
increasing• Syndication needed
among groups to fill rounds entrepreneurs need
Angel Group Investment Size
over $750K4%$500K to
$750K8%
$250K to $500K42%
$150K to $250K23%
under $150K23%
Source: ACA Confidence Survey, 2012
Syndication – Multiple Angel Groups Needed to Fill Rounds
Investment Activity Per Group
• Figures are for 2009-2011 on an annual basis• Most active groups are on coasts• Golden Seeds among most active • Central US leaders: Austin, Columbus, Pittsburgh
Source: Combination of Halo Report data and self reported through ACA Surveys
Medians RangeDeals 6 to 7 0 to 55Total $ Invested $1.75 to $2M $0 to $15M$ Per Deal $240K ‐ $291K $0 ‐ $780K
Group Preferred Investment Per Round
Percent of Groups
Source: 2010 ACA Confidence Survey and 2010 Member Directory
0 10 20 30 40 50
> $750,000
$500,000 - $750,000
$250,000 - $500,000
$150,000 - $250,000
< $150,000
Preferred Investment/Company Stage
0
10
20
30
40
50
60
70
80
Seed/Startup Early Stage Expansion Later Stage
Perc
ent o
f Gro
ups
Source: 2011 ACA Angel Group Confidence Survey and 2011 Member Directory
Seed/ Early Expansion Later Startup Stage Stage
2012Investment Preferences by Sector
Percent of Groups
Source: ACA Summit Confidence Survey – 2012
77.8%55.6%
77.8%
81.0%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
SoftwareMobile & Telecom
MediaInternet
IndustrialHealthcare
Financial ServicesEnvironmental Svcs & Equipment
Energy & UtilitiesElectronics
Consumer Products & SvcsComputer Hardware & SvcsBusiness Products & Svcs
0
5
10
15
20
25
30
35
40
2 to 10 11 to 25 26 to 50 51 to 75 76 to 100 101+
Investors Per Group – 2011
Source: 2011 ACA Confidence Survey and 2011 Member Directory
Average = 43.1 Median = 34.5
Perc
ent o
f Gro
ups
Co-Investment/ Follow-On Preferences
Percent of Groups
Source: 2009 ACA Angel Group Confidence Survey
0 20 40 60 80 100
No co-investment
Other private equity
Family offices
Later-stage VC
Early-stage VC
Other angel groups
Individual angels
Syndication Process Increases Investment
• Median Length of Time to Close: 90 Days• Median Amount New Funding: $200,000• Percent Closed as Syndicated Deals: 65%
52%
5%
29%
14%
FundedIn ProcessNot FundedFunded Elsewhere
Preferred Deal Terms
Percent of Groups
Source: ACA-SVB Confidence Survey – March, 2010
Priced Rounds83%
Convertible Debt14%
Other3%
Deal Flow Statistics – Angel Groups
•Prescreening
•Screening
•Due Diligence
•Investment
•OVERALL
1 in 4 to screening
1 in 3 to DD/ present
1 in 3 to investment meeting
1 in 2 raise money
1 to 4 in 100 who apply receive investment
More InformationMarianne HudsonAngel Capital Association913-894-4700mhudson@angelcapitalassociation.orgwww.angelcapitalassociation.orgwww.angelresourceinstitute.org
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